Third-party delivery is the hot topic among restaurateurs right now, but is it really where consumers are and what they want? With all of its challenges, does this new force have the staying power and opportunity to really shake up the traditional takeout and delivery market long term? Sure, delivery through a partner can allow operators to reach a wider swath of potential customers, but at the same time, restaurants have to be concerned with everything from food safety and proper packaging to their intellectual property and how the brand is being represented. For many, it begs the question: Is it worth the cost?
Consumers prefer direct delivery
At this point, 44% of consumers say they are likely to use direct delivery from a restaurant, compared to just 22% of those willing to use third-party restaurant delivery, according to Patrick Noone, SVP of Technomic. But, he said at the Restaurant Leadership Conference earlier this month, “We’re going to see continued changes within the industry … expect to see continued growth in third-party delivery.”
Delivery isn’t the only popular off-premise option
The fact is, some consumers are still OK leaving their homes to pick up their restaurant meals—as long as they don’t have to get out of the car. Some 37% of consumers say they are likely to use curbside pickup if it’s offered, finds Technomic. Why? Some diners still aren’t sold on tech; 12% say they don’t like ordering food online or via app, according to the upcoming Consumer Direct Report from Technomic, showing that the at-the-store order is still important to some.
So who is using third parties?
At this point, it’s still a relatively new audience. Some 43% of third-party delivery users just started using the service within the past year. But of those actively using third-party delivery services, nearly half are ordering on a weekly basis. And a lot (more than half) are using it when they eat alone. That’s especially true among younger diners, 62% of whom order third-party delivery when they are on their own.
But most are using just one service
Less than a third of consumers use multiple third-party companies, whereas three in five always use the same one. Of those that order from a consistent company, but switched which one they use (9%), reasons for the shift include bad service, a limited selection of restaurants or a recommendation from a peer.
Convenience is worth the cost—to some extent
When asked if they were willing to pay more, knowing that restaurants often have to pay third-party companies up to 30% of the charge as a fee, 42% said yes. That said, cost is currently the biggest barrier among those who tried third-party delivery and stopped using it. Three in 10 discontinued service because it was too expensive, and 23% think the delivery fee specifically is too much. So operators have to find the balance of how much more is too much, based on their own prices and value equation.
So is there a cost solution?
Nearly three in 10 consumers would consider paying a flat monthly membership fee to cover delivery, and it would, in fact, make third-party delivery a more appealing option, they say. Another factor that may cause an uptick in use—rewards. While not an option at the moment—and a sore spot for regular restaurant customers who aren’t earning loyalty points when ordering through these services—reward cards for frequent customers would make third-party delivery more appealing to a quarter of users.